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Globalization of the World Economy:
Potential Benefits and Costs and a Net Assessment
by
Michael D. Intriligator *
Mailing Address:
Michael D. Intriligator
Department of Economics
University of California, Los Angeles
Los Angeles, CA 90095-1477
Telephone: 310-825-4144
Fax: 310-825-9528
E-mail: [email protected]
Paper prepared in Microsoft WORD
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Globalization of the World Economy:
Potential Benefits and Costs and a Net Assessment
by
Michael D. Intriligator
Introduction and Purpose
Globalization is a powerful real aspect of the new world system, and it
represents one of the most influential forces in determining the future course
of the planet. It has manifold dimensions: economic, political, security,
environmental, health, social, cultural, and others. The focus here will be on
the concept of "globalization" as applied to the world economy. The term was
coined in the 1980’s, but the concept is an old one that has different
interpretations to different people. Partly as a result of these different
interpretations, there are very different reactions to "globalization," with some
policymakers, scholars, and activists seeing it as a force for advancing the
world economy while others, again all three, seeing it as a serious danger to
the world economic system. (For the former, supporting globalization, see
International Monetary Fund, 1997; Ohmae, 1990; International Monetary
Fund Staff, 2000; Friedman, 2000; Micklethwait and Wooldridge, 2000;
World Bank, 2002. For the latter, opposing globalization, see Greider, 1997;
Rodrik, 1997; Bauman, 2000; Gray, 2000; Giddens, 2000; Hutton and
Giddens, 2000; Hertz, 2001; Bhagwati, 2001; Stiglitz, 2002; and Sullivan,
2002)
There are three purposes of this paper. First, it will clarify the notion of
"globalization" as applied to the world economy. Second, it will evaluate both
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the potential benefits and the potential costs stemming from globalization.
Third, it will consider how the costs or dangers stemming from globalization
could be offset through wider international cooperation and the development
of new global institutions. (For a related perspective, see Soros, 2002;
Bourguignon et. al., 2002; and Fischer, 2003)
The view taken here, representing the thesis of this paper, is that
there are both positive and negative aspects to globalization, that some of its
positive features stem from the effects of competition that it entails, and that
some of the negative aspects that could potentially lead to conflicts could be
offset by international or global cooperation through agreements on policy or
through the development of new international institutions. Thus, while
globalization can cause international conflicts, it can also contribute to their
containment through the beneficial effects of competition and the potential of
global cooperation to treat economic and other threats facing the planet.
I. Globalization of the World Economy: An Interpretation
"Globalization" will be understood here to mean major increases in
worldwide trade and exchanges in an increasingly open, integrated, and
borderless international economy. There has been remarkable growth in
such trade and exchanges, not only in traditional international trade in goods
and services, but also in exchanges of currencies; in capital movements; in
technology transfer; in people moving through international travel and
migration; and in international flows of information and ideas. One measure
of the extent of globalization is the volume of international financial
transactions, with over $1.2 trillion flowing through New York currency
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markets each day, and with the volume of daily international stock market
transactions exceeding this enormous amount.
Globalization has involved greater openness in the international
economy, an integration of markets on a worldwide basis, and a movement
toward a borderless world, all of which have led to increases in global flows.
There are several sources of globalization over the last several decades.
One such source has been technological advances that have significantly
lowered the costs of transportation and communication and dramatically
lowered the costs of data processing and information storage and retrieval.
The latter stems from developments over the last few decades in electronics,
especially the microchip and computer revolutions. Electronic mail, the
Internet, and the World Wide Web are some of the manifestations of this new
technology, where today's $2,000 laptop computer is many times more
powerful than a $10 million mainframe computer of a generation ago.
A second source of globalization has been trade liberalization and
other forms of economic liberalization that have led to reductions in trade
protection and to a more liberal world trading system. This process of wider
liberalization started in the last century, but the two World Wars and the
Great Depression interrupted it. It resumed after World War II through the
most-favored-nation approach to trade liberalization, as embodied in the
1946 General Agreement on Tariffs and Trade (GATT) that evolved into the
World Trade Organization (WTO). As a result, there have been significant
reductions in tariffs and other barriers to trade in goods and services. Other
aspects of liberalization have led to increases in the movement of capital and
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other factors of production. Some economists and historians have suggested
that globalization is little more than a return to the world economy of the late
nineteenth century and early twentieth century, of the century from the
Congress of Vienna in 1815 to the outbreak of World War I in 1914. At that
time borders were relatively open and there were substantial international
capital flows and migrations of people, when the major nations of Europe
depended critically on international trade as part of the colonial system. This
is particularly the view of some British scholars, looking back to that period of
British imperial dominance of the world economy. While there are some
similarities in terms of trade and capital movements, the period of a century
ago did not have some of the major technological innovations that have led
to a globalized world economy today that is qualitatively different from the
international economy of the last century.
A third source of globalization has been changes in institutions, where
organizations have a wider reach, due, in part, to technological changes and
to the more wide-ranging horizons of their managers, who have been
empowered by advances in communications. Thus, corporations that had
been mainly focused on a local market have extended their range in terms of
markets and production facilities to a national, multinational, international, or
even global reach. These changes in industrial structure have led to
increases in the power, profits, and productivity of those firms that can
choose among many nations for their sources of materials, production
facilities, and markets, quickly adjusting to changing market conditions.
Virtually every major national or international enterprise has such a structure
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or relies on subsidiaries or strategic alliances to obtain a comparable degree
of influence and flexibility. As one measure of their scale, almost a third of
total international trade now occurs solely within these multinational
enterprises. With the advent of such global firms, international conflict has, to
some extent, moved from nations to these firms, with the battle no longer
among nations over territory but rather among firms over their share of world
markets. These global firms are seen by some as a threat to the scope and
autonomy of the state, but, while these firms are powerful, the nation state
still retains its traditional and dominant role in the world economic and
political system and is likely to remain in this role. (Waltz, 1999)
Non-government organizations, the NGO's, have also taken a much
broader perspective that, as in the case of the global firms, is often
multinational or global. Even international organizations, such as the United
Nations, the International Monetary Fund and World Bank, and the World
Trade Organization have new global roles. Overall, multinational enterprises
and other such organizations, both private and public, have become the
central agents of the new international globalized economy.
A fourth reason for globalization has been the global agreement on
ideology, with a convergence of beliefs in the value of a market economy and
a free trading system. This process began with the political and economic
changes that started in the 1978 reforms in China and then involved a “falling
dominoes” series of revolutions in Eastern and Central Europe starting in
1989 and ending with the dissolution of the Soviet Union in December 1991.
This process led to a convergence of ideology, with the former division
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between market economies in the West and socialist economies in the East
having been replaced by a near-universal reliance on the market system.
This convergence of beliefs in the value of a market economy has led to a
world that is no longer divided into market-oriented and socialist economies.
A major aspect of this convergence of beliefs is the attempt of the former
socialist states to make a transition to a market economy. These attempted
transitions, especially those in the former Soviet Union and in Eastern and
Central Europe have, however, been only partially successful. The nations
involved and their supporters in international organizations and advanced
western market economies have tended to focus on a three-part agenda for
transition, involving: 1) stabilization of the macroeconomy, 2) liberalization of
prices, and 3) privatization of state-owned enterprise. Unfortunately, this
three-part agenda, sometimes referred to as the “Washington Consensus”
and that I refer to elsewhere as the “SLP” approach to transition fails to
appreciate the importance of 1) building market institutions, 2) establishing
competition, and 3) providing for an appropriate role for the government in a
modern mixed economy. I have referred to this alternative three-part agenda
in other publications as the “ICG” approach to transition. (Intriligator, 1993a,
b; 1996a, b; 1997; 1999)
A fifth reason for globalization has been cultural developments, with a
move to a globalized and homogenized media, the arts, and popular culture
and with the widespread use of the English language for global
communication. Partly as a result of these cultural developments, some,
especially the French and some other continental Europeans, see
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globalization as an attempt at U.S. cultural as well as economic and political
hegemony. In effect, they see globalization as a new form of imperialism or
as a new stage of capitalism in the age of electronics. Some have even
interpreted globalization as a new form of colonialism, seeing the U.S. as the
new metropole power and most of the rest of the world as its colonies. In this
view, the rest of the world supplies the U.S. not only with raw materials and
markets on a global basis, as in earlier forms of European colonialization, but
also with production facilities and labor, capital, and other inputs to the
production process.
Whether one sees globalization as a negative or as a positive
development, it must be understood that it has clearly changed the world
system and that it poses both opportunities and challenges. It is also clear
that the technological, policy, institutional, ideological, and cultural
developments that have led to globalization are still very active. Thus, barring
a radical move in a different direction stemming from major changes in the
current world system, as happened earlier with two World Wars and a Great
Depression, these trends toward greater globalization will likely continue or
even accelerate in the future. One important aspect of these trends will be
the growth in international trade in services that has already increased
substantially but promises even greater growth in the future, especially in
such areas as telecommunications, financial, and computer services. The
result of these trends will be continued moves toward a more open and a
more integrated world as it moves closer and closer to a planet without
borders and to a more integrated, open, and interdependent world economy.
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The result will be even greater worldwide flows of goods, services, money,
capital, technology, people, information, and ideas.
II. Impacts of Globalization on National Economies
Globalization has had significant impacts on all economies of the
world, with manifold effects. It affects their production of goods and services.
It also affects the employment of labor and other inputs into the production
process. In addition, it affects investment, both in physical capital and in
human capital. It affects technology and results in the diffusion of technology
from initiating nations to other nations. It also has major effects on efficiency,
productivity, and competitiveness.
Several impacts of globalization on national economies deserve
particular mention. One is the growth of foreign direct investment (FDI) at a
prodigious rate, one that is much greater than the growth in world trade.
Such investment plays a key role in technology transfer, in industrial
restructuring, and in the formation of global enterprises, all of which have
major impacts at the national level. They have been especially significant in
China. A second is the impact of globalization on technological innovation.
New technologies, as already noted, have been a factor in globalization, but
globalization and the spur of competition that it entails have also stimulated
further advances in technology and sped up its diffusion within nations
through FDI. A third is the growth of trade in services, including financial,
legal, managerial, and information services and intangibles of all types that
have become mainstays of international commerce. In 1970, less than a third
of foreign direct investment related to the export of services, but today that
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has risen to more than half and it is expected to rise even further, making
intellectual capital the most important commodity on world markets. As a
result of the growth of services both nationally and internationally, some have
called the current age as one of competence, underscoring the importance of
lifelong education and training and the investment in human capital in every
national economy.
III. The Benefits of Globalization Stemming from Competition
It has already been noted that globalization has both positive and
negative effects. This section will focus on its positive effects of globalization,
stemming from competition, while the next will focus on its negative effects,
which could lead to potential instabilities and conflicts. Finally, the last
section will consider the potential for international cooperation to diminish or
to offset these negative effects of globalization.
Globalization has led to growing competition on a global basis. While
some individuals and organizations fear competition, there are many
beneficial effects of competition that can increase production or efficiency.
Competition and the widening of markets can lead to specialization and the
division of labor, as discussed by Adam Smith and other classical
economists writing in the eighteenth century on the benefits of a market
system at the beginning of the industrial age. Specialization and the division
of labor, with their implications for increases in production, now exist not just
at the national level but also on a worldwide basis. Other beneficial effects
include the economies of scale and scope that can potentially lead to
reductions in costs and prices and could result in continuing economic
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growth. Other benefits from globalization include the gains from trade in
which both parties gain in a mutually beneficial exchange, where the
"parties" can be individuals, firms and other organizations, nations,
continents, trading blocs, or other entities. Globalization can also result in
increased productivity as a result of the rationalization of production on a
global scale and the spread of technology and competitive pressures for
continual innovation on a worldwide basis.
Overall, these beneficial effects of competition stemming from
globalization show its potential value in improving the position of all parties,
with the potential for increased output and higher real wage levels and living
standards. The result is a potential for greater human well being throughout
the world. Of course, there is the distributional or equity issue of who does, in
fact, gain from these potential benefits of globalization. As one important
case in point, however, China has benefited enormously from globalization
as a result of which hundreds of its people have been lifted from poverty,
with China becoming the factory for most of the world.
IV. The Costs of Globalization and Potential Conflicts
Globalization involves not only benefits, but also has costs or potential
problems that some critics see as great perils. These costs could lead to
conflicts of various types, whether at the regional, national, or international
level. One such cost or problem is that of who gains from its potential
benefits. There can be substantial equity problems in the distribution of the
gains from globalization among individuals, organizations, nations, and
regions. Indeed, many of the gains have been going to the rich nations or
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individuals, creating greater inequalities and leading to potential conflicts
nationally and internationally. Some have suggested the possibility of
convergence of incomes globally based on the observation that the poor
nations are growing at a faster rate than the rich nations. (Barro, 1997) The
reality, however, is that a small group of nations, the "tiger economies" of
East Asia, especially China, South Korea, Taiwan, and Malaysia have been
growing at rapid rates, while the least developed nations of Africa, Asia, and
South and Central America have been growing at a slower rate than the rich
nations, leading to a bimodal “twin peaks” distribution of incomes. (Quah,
1996) The poor nations are thus becoming increasingly marginalized. The
result has been not a convergence but rather, with the important exception of
East Asia, a divergence or polarization of incomes worldwide. The rapidgrowth economies of East Asia are joining the rich nations, but the poor
nations are slipping even further behind. This growing disparity leads to
disaffection and possibly even international conflicts as nations seek to join
the club of rich nations and the have-not nations struggle with the have
nations for their share of world output. This issue of distribution is a major
challenge in the process of the globalization of the world economy.
A second cost or problem stemming from globalization is that of major
potential regional or global instabilities stemming from the interdependencies
of economies on a worldwide basis. There is the possibility that local
economic fluctuations or crises in one nation could have regional or even
global impacts. This is not just a theoretical possibility as seen in the financial
crisis in Asia, starting in Thailand in 1997 and then spreading to other
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Southeast Asian economies and even to South Korea, with delayed effects in
Russia in its economic collapse of August 1998. These linkages and
potential instabilities imply great potential mutual vulnerability of the
interconnected nations of the global economy. A worldwide recession or
depression could lead to calls to break the interdependencies that have been
realized through the globalization process, as happened in the Great
Depression of the 1930's, with competitive devaluations, beggar-myneighbor policies, escalating tariffs, other forms of protectionism, etc. The
result could be economic conflict, gravitating to economic warfare and
possibly even to military conflict, repeating the history of the interwar period
of the 1930’s that led to the largest war in human history. Such a scenario is
not impossible, and glimpses of it were seen in the 1997-98 Asian financial
crisis.
A third type of problem stemming from globalization is that the control
of national economies is seen by some as shifting, in part, from sovereign
governments to other entities, including the most powerful nation states,
multinational or global firms, and international organizations. The result is
that some perceive national sovereignty as being undermined by the forces
of globalization. Thus, globalization could lead to a belief among national
leaders that they are helplessly in the grip of global forces and an attitude of
disaffection among the electorate. The result could be extreme nationalism
and xenophobia, along with calls for protectionism and the possible growth of
extremist or fundamentalist political movements, ultimately leading to
potential conflicts.
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It is sometimes alleged that a cost of globalization is unemployment in
the high wage industrialized economies. The relatively low unemployment
rates in many high wage nations and their high rates in many low wage
nations appear to disprove this allegation. National policy and technological
trends are much more important determinants of employment than global
factors. A related myth is that globalization is threatening the social welfare
provisions of some states, but other factors are much more important,
including domestic fiscal policy and demographic trends. In both cases,
globalization is a convenient scapegoat for failures of national policy.
It is important also to appreciate that the economic aspects of
globalization are but one component of its effects. There are potentially very
important noneconomic impacts of globalization involving great risks and
potential costs, even the possibility for catastrophe. One is that of security,
where the negative effects of globalization could lead to conflicts, as
suggested above, and even possibly another world war. Indeed, the very
process of globalization leading to integration of markets could make
conflicts escalate beyond a particular region or raise the stakes of conflict,
for example, from conventional weapons to weapons of mass destruction. A
second noneconomic area in which globalization could lead to catastrophic
outcomes is that of political crises, that could escalate from local to largescale challenges. A third such area is that of the environment and health,
where the greater interconnectedness stemming from globalization could
lead again to catastrophic outcomes, such as global warming and
pandemics, repeating the great influenza pandemic of 1918.
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V. The Role of Global Cooperation in Dealing with Global Threats and in
Creating a New Post Cold War System
The last two sections have highlighted both the benefits and the costs
stemming from globalization. Some could see globalization as a very
dangerous negative development by focusing on its costs and the potential
for conflict. Others, on the other hand, could see it as a positive
development, one offering unprecedented opportunities. Both of these views
contain some elements of truth, but each should be offset by the other in
order to gain a full understanding of the impacts of globalization. There are
twin myths here, the optimistic one that globalization leads to only positive
outcomes and the pessimistic one that globalization leads only to negative
outcomes, and as noted already the literature on this subject is polarized into
these two extreme viewpoints. Any objective treatment or net assessment,
however, would have to recognize both the benefits and costs of
globalization.
What is the net result of globalization, when taking both benefits and
costs into account? The answer depends crucially on the nature of the world
system. In a world beset by conflicts, globalization would probably have a net
negative impact. Conversely, in a cooperative world, globalization would
probably have a net positive impact. Thus, globalization represents a major
challenge and at the same time an unprecedented opportunity in terms of the
possibilities for conflict or cooperation. The challenge is to create a new
world system in the aftermath of the cold war and the movements toward
globalization that would enhance its generally beneficial effects and that
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would minimize its actual or potential costs. The key to such a world system
will be cooperation among the nations of the world and dynamic innovation,
including the establishment of new institutions.
The challenge of the present globalized and post cold war economy is
comparable to the challenge facing the allied nation victors in World War II.
The old world had been destroyed and a new world had to be created. Not
one, but two world systems were created, in fact, one in the West and the
other in the East. Both involved the creation of new institutions that would
replace the ones that had been destroyed in the war. Each side had its own
ideology and organization, that in the West being market oriented and that in
the East being socialist. Now, of course, the ideological divide has dissolved,
and there is a convergence of ideology on the value of a market economy.
A small group of Americans helped create a new world system for the
West during the period from 1945 to 1955. One of the major participants was
Dean Acheson, the U.S. Secretary of State during part of this period. His
memoirs are aptly named Present at the Creation, given his role in creating
this new world system. Another was Will Clayton, who developed the
blueprints for two of the basic institutions of the new world system. One was
the Marshall Plan that was announced by General George C. Marshall at the
Harvard commencement in 1947 and became the most successful aid
program in history. The other was the General Agreement on Tariffs and
Trade (GATT) that evolved into the present World Trade Organization.
These Americans, together with President Truman, George Marshall, and
others created the institutions that brought the devastated nations of Europe
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into the world community. These institutions included the United Nations; the
World Bank and the IMF; the Marshall Plan and OEEC (later to evolve into
the OECD); GATT; NATO; and others. These institutions and the new world
system that they helped create was most successful in bringing the nations
of Europe, including both former enemies and devastated allies, into this new
system and in promoting reconstruction and growth.
The present post Cold War period has some similarities to the one
after World War II in that a new world system must be created. Such a
system that would have to take account of the new situation - that of a world
not divided by ideology and one becoming increasingly integrated. The
sequence of revolutions that began in Eastern Europe in 1989 led directly or
indirectly to the end of the Cold War, the demise of the Warsaw Pact, the
unification of Germany, the dissolution of the Soviet Union, and the
attempted transition of the former socialist states to democracy and a market
economy, with only mixed success. The West for its part has been only
partially successful In establishing structures such as those developed after
World War II to bring Russia, other former Soviet states, and Central and
Eastern Europe into the world economic and political system. In some
respects the treatment of the former Soviet Union and its former allies in the
current period is unfortunately similar to the treatment of Germany after
World War I rather than its more enlightened treatment after World War II
when it was one of the recipients of Marshall Plan assistance and joined
various European and international institutions. (Keynes, 1919, foresaw the
disastrous consequences of the treatment of Germany after World War I)
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Overall, the challenge of globalization will require truly cooperative
efforts of the great nations, especially among the new great powers of the
European Union, the United States, Canada, Japan, Russia, China, India,
Brazil, and others. Their joint activity in establishing new political
arrangements and institutions could go a long way to solving global
problems, including the economic and other challenges stemming from
globalization. As was true in the earlier period of the creation of a new world,
it will be necessary to reinvent existing institutions and/or to create new ones
so as to deal with economic challenges, such as the problems of distribution
and mutual vulnerability stemming from globalization. These institutions must
have global perspectives and responses and they will require substantial
resources and enforcement mechanisms, including some elements of
supranational decision-making and authority, along with appropriate
transparency and accountability.
Consider, for example, how global cooperation and new international
institutions can treat the several problems identified earlier as costs or
problems of globalization. The first of these problems was that of the
distribution of income and specifically the gains from globalization both within
and between nations. A supranational institution based on global cooperation
could address this problem. It would, in effect, tax the nations gaining from
globalization and use the proceeds to provide financial and technical
assistance to those losing from globalization. This is already being done in a
somewhat haphazard way through the World Bank and, in particular, its soft
lending arm, the International Development Association (IDA) that provides
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subsidized loans to poor nations on more favorable terms than the World
Bank provides. It should be done, however, on a more systematic basis,
which would require either a new international institution or an expansion and
change in the nature of the World Bank. The rich nations should be expected
to support the establishment of such an institution as an investment in global
stability, assuming they recognize the dangers of serious disparities in the
worldwide distribution of income.
The second of the problems identified earlier as stemming from
globalization was the fragility of the international economic system, leading to
mutual vulnerability. Again, international cooperation and the development of
new institutions or the expansion of existing institutions could address this
problem. The International Monetary Fund could be instrumental in dealing
with this problem. The IMF has played a key role in providing support to
nations that have experienced instabilities, as in its support for Mexico during
the peso crisis and its agreement to support South Korea during the East
Asia financial crisis, although in other crises its actions have in fact
aggravated rather than ameliorated the underlying problems. A regularized
and more credible insurance against these risks would require a substantial
augmentation of the resources of the IMF, the assets of which have not
grown at the same rate as international financial exchanges. International
cooperation could also lead to the implementation of the Tobin tax, a small
tax on foreign exchange transactions that could play a valuable role in
limiting destabilizing currency speculation and, at the same time, provide
important added funding for international organizations.
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The third of the problems identified earlier as stemming from
globalization was that of the perceived loss of sovereignty of national
governments and political leaders. This development could lead to fear of the
loss of ability of nations to determine their economic policies, political
disaffection, and the rise of extremist politicians and political movements.
The process of globalization, however, need not lead to a loss of
sovereignty. Once again, international cooperation can play a role in
ensuring the sovereignty of national governments and a proper role for
political leaders, drawing a firm line between what is in the province of these
governments and their leaders on the one side and what is in the province of
international organizations and multinational or global enterprise on the
other. Participation in the establishment of the needed institutions to deal
with these and other problems stemming from globalization will, by itself,
help political leaders to regain a sense of control over their futures and
positions in the global community. For example, the regulatory regimes of
nations and even international organizations have become more porous and
more easily overcome through advances in technology. Examples include
the lack of regulation of the global integrated capital market, of trade in
information services that is widely expected to grow enormously, and of labor
and environmental safeguards. Cooperation among nations and international
organizations could offset these developments by themselves taking
advantage of recent technological advances and using them to reassert
control through cooperative activities.
20
Overall, there are several possible vehicles for cooperation as a way
of responding to the serious challenges of globalization. One is the
strengthening
of
existing
international
institutions.
Another
is
the
establishment of new institutions, as in the case of the World Trade
Organization, which has a binding dispute settlement mechanism of a
supranational character. A third is the establishment of larger entities, such
as the expansion of the European Union, or loose combinations of nations to
treat certain economic issues, such as the G-8 or the Asian Pacific Economic
Cooperation (APEC).
Global cooperation through formal or informal institutions provides an
increasingly important mechanism to ensure the proper treatment of global
problems, including those stemming from globalization trends. Through such
global cooperation it should be possible to ensure equity and stability in a
globalized world, leading to economic growth for all, the transition to a
market economy for former socialist states, and economic development for
the poorer nations. Such cooperation is also the way to treat the
noneconomic problems of globalization, including those of environmental and
health protection on a worldwide basis, freedom from political crises or
instability, and global peace and security for the planet. The challenge will be
to develop such new modes of cooperation and new institutions to deal with
the challenges of globalization.
21
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* Professor of Economics, Political Science, and Policy Studies
University of California, Los Angeles and Senior Fellow, The Milken Institute.
Mailing address:
Michael D. Intriligator
Department of Economics
University of California, Los Angeles
Los Angeles, CA 90095-1477.
This paper is a revised and expanded version of “Globalization of the
World Economy: Potential Benefits and Costs and a Net Assessment,”
Milken Institute Policy Brief, February 2003, with a shortened version having
appeared in the Milken Institute Review, June 2003 as “Globalization 101.” I
would like to acknowledge, with appreciation comments on an earlier version
of this paper that I presented at a Gorbachev Foundation of North America
conference on “Globalization of the World Economy” as well as suggestions
of colleagues at UCLA and the Milken Institute.
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